Home Money Backlash against free trade deal intensifies as CEO posts investor forum

Backlash against free trade deal intensifies as CEO posts investor forum

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Backlash against free trade deal intensifies as CEO posts investor forum

Freetrade CEO Viktor Nebehaj has fueled the ire of crowdfunding investors after IG Group bought the trading platform on Thursday.

On a Freetrade forum, Nebehej posted: “I appreciate that for many of you who backed us after our Series B this means your investment is being made at a loss.”

He added: “I am personally grateful for the support of all of our crowdfunders.” I appreciate that these words may offer more or less comfort to some, depending on the return on their investment.’

Under the takeover deal, Freetrade investors will receive up to 119 pence per share, meaning many of the company’s crowdfunders will suffer losses on their investment.

IG will pay £160m to acquire Freetrade, a fact not lost on some ordinary investors who backed Freetrade when it had a valuation of £650m in 2021.

A Freetrade crowdfunder, DrPigeon, responded to Nebehej’s post saying: “Thank you, I’m losing £5,335.42 on my investment of £7,015.20.”

Adding fuel to the fire: Freetrade CEO Viktor Nebehej told investors he was grateful for their support

Another, Billybunter1, said: “I feel absolutely devastated by this.” I first invested in 2019 and almost 6 years later my £10,000 investment is worth 6,000 shares at around £7,000.’

“I get back about 10 percent of what I invested,” investor Vimfuego wrote on the forum, “someone is laughing at us somewhere.”

The platform has carried out several rounds of investment, selling shares in Crowdcube for £9.25 at its peak valuation. In 2023, the company sold shares at £2.60 each. Both fundraisers exceeded their £1 million targets.

However, later in 2023, Freetrade saw its valuation fall to £225 million, although Thursday’s deal significantly undermines even this figure.

Following the acquisition, IG said Nebehaj will remain at the helm of the company along with the rest of the management team.

Kazamx, a forum user, said: “It’s just a happy coincidence that you became a millionaire in the process.”

Furthermore, several Freetrade investors contacted This is Money directly.

‘When the crowdfunding opportunity arose (through Crowdcube) I thought it would be sensible to ‘back the company you like’ as I was told that’s how you buy shares. I had an inheritance of £1,000 available so I put the whole lot on Freetrade,” wrote one reader, James, whose name has been changed.

James said his research suggested Freetrade shares would rise, especially with an initial public offering on the cards.

He said: ‘I was disheartened and devastated to read that my shares will be sold and that Freetrade will be taken over by a larger company.

‘With a deal of £1.19 before charges, I stand to lose around 90 per cent of my inheritance/investment.

‘However, the company’s two founders still run Freetrade and will undoubtedly benefit from the merger.

“The acorns that we early adopters helped plant have grown and trampled on us.”

‘It’s disgusting as it’s money I can’t afford to lose. What a bad taste it has left!

In his forum post, Nebehej promised that the acquisition by IG “will give us the foundation to grow, seriously compete in the investment platform market and build a UK fintech with strong and consistent backing.”

However, for small investors in crowdfunding, this means sacrificing the hard-earned money they pledged to help grow a company, one that they now feel has sold them down the river at the first opportunity to make easy money.

As one investor, Ravi.Ramireddy, told Nebehej: ‘The deal is helping you and some big investors. You have ruined many of us, shame on you.

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